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Scarlett Johansson Is Taking Disney to Court Over Same-Day Video Streaming

Scarlett Johansson has filed a lawsuit against Walt Disney (NYSE: DIS), accusing the entertainment giant of breaching the terms of her contract for the most recent Marvel movie, Black Widow. This plot twist will help shape the future of the film industry as we know it. If the forgettable Trolls 2 could change Hollywood history, so can a long-awaited blockbuster under the Marvel banner.

What's going on?

The superstar, who plays Black Widow in Disney's Marvel movies, claims that the House of Mouse violated the terms of her contract when Black Widow was presented on the Disney+ streaming service on the same day as the silver-screen premiere. As reported by The Wall Street Journal, that decision reduced Johansson's payments for Black Widow by $50 million or more. The contract was written with large bonuses based on traditional box-office results, with no consideration given to alternative channels such as Disney+.

The actor says that she and her representatives reached out to Disney several times before the movie's premiere, hoping to renegotiate the terms of the deal. After all, Disney+ didn't even exist when Johansson agreed to this contract as part of her multiyear stint with Marvel's Avengers, stretching all the way back to Iron Man 2 in 2010. It's not easy to plan ahead for a future that isn't in the cards yet.

There was a ton of precedent for a fresh agreement here.

These parties are no strangers to the conference room, having added several more titles featuring the Black Widow character due to the public's rousing embrace of her appearances in the first couple of titles. Moreover, AT&T (NYSE: T) subsidiary Warner Bros. re-inked its contracts with the key talent before giving day-and-date premieres on HBO Max to titles like In the Heights and Space Jam: A New Legacy.

But Disney gave the cold shoulder to the Johansson camp's renegotiation attempts: no new deal. The company decided to roll with the premium Disney+ presentation, despite contract language that reportedly made it clear that the film had to rely on a traditional release-window policy. A large slice of the early Black Widow audience saw the movie via streaming rather than in theaters.

Disney was quick to argue that the company was following Johansson's signed contract to the letter, and that the successful Disney+ broadcast should help her reach bonus payments on top of the $20 million she has earned to date. The company went so far as to call the lawsuit "sad and distressing in its callous disregard for the horrific and prolonged global effects of the COVID-19 pandemic." In other words, Ms. Johansson: See you in court, and don't expect a friendly settlement anytime soon.

Image source: Getty Images.

What does it mean?

No matter who walks away with the trophy from this courtroom scuffle, Johansson's Black Widow lawsuit should set the stage for whatever comes next in the history of big-screen entertainment.

If the Oscar-nominated and Tony-winning star gets the upper hand, every studio will be forced to sign new deals with their top talent. The replacement contracts would need to allow for changing circumstances and as-yet-unimagined movie-screening technologies. This outcome would knock some bottom-line profits out of the hands of Hollywood studios, sending more of it to the on-screen talent.

On the other hand, a Disney victory would reinforce the contractual obligations on both sides of every existing deal, no matter how the coronavirus crisis or other unexpected events might change the business environment. As a result, more money would flow to each studio's bottom line, leaving less for the leads on screen.

The final verdict will probably fall somewhere between these extremes, striking a balance between the ironclad legal power of established contracts and the human concerns of on-screen talent in the middle of a generational crisis.

As a Disney shareholder, I can respect the company's desire to stick with the original contract, since that seems to work out in Disney's favor. At the same time, the official response to Johansson's complaints strikes me as tone-deaf and insensitive. If Scarlett Johansson -- the decorated fan favorite and veteran contributor to the Avengers franchise -- can't drag Disney to the negotiating table, then who else stands a chance?

This move may very well push some of Disney's key talent away from this studio, perhaps sending some to rival producers with a stronger reputation of reaching fair deals. That's not worth the relative chump change of cost savings and bonus profits that Disney pocketed from Black Widow's premiere.

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Anders Bylund owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool has a disclosure policy.


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